UK retailers claw back losses as wave of selling turns to opportunistic buying
Heavyweight UK retailers clawed back some of their losses on Monday afternoon as the morning’s sell-off turned to buying.
The FTSE 350 general retail index had dropped by as much as four per cent in early trades, but later stabilised to minus 2.8 per cent.
Even UK retailers with very little presence in the US, and who are poised to outperform the wider UK market – like Next, Tesco M&S, who are only exposed via some third-party or online selling – dropped around four per cent this morning.
“We’ve seen selling across the board today and no sector was immune,” Dan Coatsworth, investment analyst at AJ Bell, said.
“Investors might be worried that consumer confidence deteriorates in the face of an economic slowdown and a return of inflationary pressures caused by tariffs and extra business costs.”
Analysts produced grim prognoses this morning: “Growth will be down and inflation up and this is ultimately going to hit consumers and consequently result in lower earnings for companies.”
“Any company producing goods outside of America is going to struggle and there are no quick fixes,” Chris Beckett, head of equity research at Quilter Cheviot, said.
“When the public has been subjected to a weekend of worrying news, it’s no wonder that some people raced to lock in profits,” Coatsworth said.
“However, the selling seems to have stabilised and some names including Marks & Spencer had clawed back some of the losses by lunchtime. That suggest the initial wave of selling is now turning to opportunistic buying by another set of investors.”
Companies which fell this morning, like M&S are Tesco, are well-placed to perform better than the market in the UK.
“I think the shares [fell], albeit less than the market, due to [macro] concerns,” RBC analyst Richard Chamberlain said.
“But.. we think M&S is well placed to outperform and [we even think] some concerns in the sector e.g. about Asda price war impacts have been overdone,” he added.